www.securitiesindustry.com
AUGUST 6, 2007
NEWS DESK
Portfolio margining accounts; optionsXpress discounts; Townsend
in Mexico; and more. PAGE 3
PERSPECTIVES
GUEST COMMENTS: A broker-dealer’s failure to follow its documented
procedures points up how anti-money-laundering compliance has
entered a new and tighter phase, says
KPMG’s Sven Stumbauer. Also, Restricted Stock Systems’ Gregory
Besner on 10b5-1 plans. PAGE 4
The Volatility Effect: As
Traders Weigh Options,
NYSE Holds Its Own
New venues also showed staying
power during July volume spikes
BYJOHNHINTZE
When the Dow Jones Industrial Average (DJIA) tumbled 416 points on Feb. 27, the
New York Stock Exchange, where
most of the Dow’s components are
listed, saw its share of the listed
market—not counting activity on
the NYSE Arca electronic exchange—jump to nearly 70 percent. That brought back memories
of the good old days of domination
for the U.S. flagship of that prototypical multinational exchange organization, NYSE Euronext.
ECNs Exchanges
Shares of Matched Orders
Nasdaq 38.1%
NYSE 36.8%
Arca 12.3%
Amex 1.1%
Other 1.2%
BATS 7%
Other 1.1%
ORIGINAL SOURCES: The CFTC’s
market manipulation charges against
Amaranth. PAGE 7
VIEWPOINTS: Communication and
objectivity in the buy-side-sell-side
relationship is the objective of former
portfolio manager Randy Cass’ First
Coverage. PAGE 8
DEPARTMENTS
TECHNOLOGY: To reassure clients
about data security, Scottrade offers
free McAfee software and joins the
VeriSign Identity Protection program. Firewalls
and other PC security are
“the single most important
step” for protecting information online, says Scottrade information security director Grant Bourzikas. PAGE 9
Source: Tabb Group Liquidity Matrix, May 2007
Its market-share percentage
soon contracted closer to 60 percent, where it has hovered much
of the year as new and more competitive execution venues have
been making their presence felt.
Continued on page 18
TSE Seeks to Polish Image With
New Technology and Alliances
A-list exchanges eager to cooperate; derivatives platform delayed
BY WANG FANGQING
The Tokyo Stock Exchange
(TSE) has been a hard-luck
poster child in recent years, dealing
with embarrassing system crashes,
capacity problems and staff dismissals. At a time when its peers,
from the New York Stock Exchange
(NYSE) on down, are entering into
mergers to prepare for globally in-terconnected markets, TSE, still not
a publicly traded company, has been
on the sidelines.
But TSE has an initial public offering in the works and is showing
new life in other ways. It is investing
heavily in technology to overcome
TECHNOLOGY : GigaSpaces and Microsoft collaborate to meet high-throughput, low-latency demands.
PAGE 10
TRADING: Jeromee Johnson, formerly of Tabb Group and UNX, joins ATS
developer 3D Markets as president.
PAGE 11
COMPLIANCE: TradingScreen prepares its customers for new European
regulations with its MiFID in a Box.
PAGE 12
COMPLIANCE: With simplified licensing, Hong Kong seeks to raise world
stature and attract hedge funds.
PAGE 16
American Exchange Drops Hammer on Newly Merged SRO Points Toward Principles
Reg SHO Violators BYCAROLE. CURTIS Exchange Commission on July 26, BYJOHNHINTZE A lready in its early days, new and became effective July 30. The self-regulatory organization consolidated non-government reg-
In a sign that regulators are (SRO) Finra—the Financial Indus- ulator for broker-dealers oversees
toughening enforcement of try Regulatory Author- over 5,100 securities
new short-selling rules, the Amer- ity—is taking U.S. bro- firms and 660,000 reg-ican Stock Exchange (Amex) last ker-dealer oversight in istered representatives.
week announced significant disci- a new direction. Its ap- Its 3,000 employees
plinary actions against two small proach is to focus in- operate from Wash-broker-dealers for improperly creasinglyonoutcomes ington, D.C. and 15
using market-maker exemptions rather than prescriptive district offices. Finra’s
to pursue naked short sales. rules, and to consider a responsibilities include
Scott Arenstein and his options firm’s size and business Mary Shapiro rulemaking, examina-market-making firm, SBA Trad- model in determining how it will be tions, enforcement, arbitration and
ing, agreed to a $3.6 million fine, regulated. mediation, in addition to the for-
$1.4 million disgorgement of prof- Finra was formed from a merg- mer NASD’s market regulation of
its and five-year suspension of his er of NASD and the member-firm the Nasdaq Stock Market, Ameri-Amex membership; and Brian regulatory functions of NYSE Reg- can Stock Exchange, International
Arenstein and his firm, ALA Trad- ulation that was announced Nov. Securities Exchange and Chicago
Continued on page 19 28, approved by the Securities and Continued on page 14
Atsushi Saito
its past problems and cooperating with several overseas partners, not least NYSE through
an alliance agreement signed
Jan. 31. Shortly thereafter, in
February, TSE signed an information sharing agreement with
the London Stock Exchange,
and in the last year it entered
into memorandums of understanding with the Korea Exchange and Taiwan Stock Exchange to promote cross-border trading.
Since the notoriety of the
system glitches in late 2005 and
early 2006, Asia’s biggest exchange has said it is investing
over $500 million to upgrade its
trading infrastructure with next-generation technology, including a backup system. On July 20,
the Tokyo exchange announced
progress on the technology
front: The number of orders it
can process each day went up
Continued on page 17
TRADING: Tokyo Stock Exchange’s operational problems echo in Singapore.
PAGE 17
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On the Web
Pace Quickens for the Fast Protocol
Exchanges take the lead after early round of enhancements
BYJOHNSANDMAN tance has picked up. An initial im- origins in implicit tagging, a 2003
Fast, an adaptation of the FIX plementation by NYSE Arca was attempt by FPL and the Chicago
p3 protocol for high-speed de- followed by one at Options Clear- Mercantile Exchange to increase
p19 livery of market data, started slow- ing Corp. in April. Icap Electron- throughput in the tag-equals-value
p19 ly in 2005. Version 1.0 wasn’t ready ic Broking and SWX Group’s virt- version of the FIX protocol.
for prime time, according to in- x exchange in London announced “It’s a relatively immature
dustry participants who met at a Fast initiatives in July. technology,” said David Litner,
recent working group conference Fast, or FIX adopted for stream- SVP of engineering at market
of FIX Protocol Ltd. (FPL) at the ing, was designed to accelerate the connectivity and FIX engine
American Stock Exchange in delivery of market data by com- company NYSE Transact Tools,
New York. pressing messages and reducing the noting that there has only been
But since the release of the Fast time it takes for data to reach cus- “one point upgrade” to Fast so
1.1 upgrade in Dec. 2006, accep- tomers’ trading systems. It has its Continued on page 16
Australia considers ATSs; Fiserv’s
acquisition of CheckFree; and
more. See Breaking News at:
www.securitiesindustry.com.
